ORENINC INDEX down on fewer deals although dollars jumped
ORENINC INDEX – Monday, January 3rd 2020
North America’s leading junior mining finance data provider
Subscribe to our weekly updates at oreninc.com/subscribe
Last Week: 44.85
This week: 36.00
The Oreninc Index fell in the week ending January 31st, 2020 to 36.00 from 44.85 although aggregate dollars increased as fewer deals were announced.
Gold continued its steady climb to higher prices as the coronavirus dominated the news. The virus continued to claim victims with new cases being reported in the Americas, Europe, Middle East, Asia and Africa. Many airlines have grounded flights to and from China while travel advisory warnings have been issued by many world governments. The World Health Organization declared the coronavirus outbreak a global health emergency as the death toll in China passed 200.
While the gold price may be benefitting from the outbreak, the opposite is true for copper, other base metals, and oil, with copper’s price recovery cut-off at the knees and the red metal losing more than 10% in a week.
In the US, impeachment proceedings against President Donald Trump continued, with his defense team essentially arguing that there is no case to answer.
The US Federal Reserve held its first FOMC (Federal Open Market Committee) meeting of 2020 and announced it had no intention of changing current interest rates, keeping them, as expected, between 1.5% and 1.75% despite president Trump hectoring the committee to cut rates on the grounds that it would enable the government to refinance the $22 trillion national debt saving billions in interest payments.
Meanwhile, Labor Department data showed that initial weekly jobless claims fell by 7,000 to a seasonally adjusted 216,000, while the Bureau of Economic Analysis reported that US gross domestic product rose 2.1% during 4Q19 in line with expectations.
In Europe, the 31st of January marked the final day of the UK’s 47-year membership of the European Union. Although little will change initially, as the two entities will remain within a transition period under existing rules and obligations until year-end, during which time they will negotiate the terms of a new relationship.
Gold prices began to rise as Federal Reserve Chair Jerome Powell took the stage following the central bank’s decision to keep rates steady on Wednesday.
On to the money: Total fund raises announced almost doubled to $97.0 million, a two-week high, which included one brokered financing for $15 million (a two-week high) and one bought-deal financing for $15.0 million (an eight-week high). The average offer size more than tripled to $5.4 million (a ten-week high) while the number of financings almost halved to 18.
The gold spot price continues its slow, steady climb, closing up at US$1,589/of from $1,571/oz a week ago. The yellow metal is up 4.74% so far this year. The US dollar index fell as it closed down at 97.39 from 97.85 last week. The VanEck managed GDXJ closed down at US$41.54 from $41.79 a week ago. The index is down 1.7% so far in 2020. The US Global Go Gold ETF also closed down at US$16.92 from $17.01 a week ago. It is down 3.64% so far in 2020. The HUI Arca Gold BUGS Index closed down at 234.63 from 236.61 last week. The SPDR GLD ETF its inventory continue to rise as it closed up at 903.21 tonnes from 900.58 tonnes a week ago.
In other commodities, silver closed down at US$18.04/oz from $18.10/oz a week ago. Copper’s pullback continued as it fell to US$2.51/lb from $2.68/lb week. The oil price also softened as WTI closed down again at US$51.56 a barrel from $54.19 a barrel a week ago.
The Dow Jones Industrial Average continued to pull back to close the week down at 28,256 from 28,989 a week ago. Canada’s S&P/TSX Composite Index also closed down at 17,318 from 17,565 the previous week. The S&P/TSX Venture Composite Index closed down at 575.18 from 581.75 last week.
- Number of financings decreased to 18.
- One brokered financing was announced this week for $15 million, a two-week high.
- One bought-deal financing was announced this week for $15 million, an eight-week high.
- Total dollars increased to $97.0 million, a two-week high.
- Average offer increased to $5.4m, a ten-week high.
Gran Colombia Gold (TSX:GCM) announced a $40 million non-brokered private placement.
- 7.1 million units @ C$5.60.
- Each unit consists of one share and a warrant exercisable @ $6.50 for three years.
- Proceeds will be used for general working capital including repurchases of its listed warrants (GCM.WT.B) under its NCIB.
Major Financing Openings
- Gran Colombia Gold (TSX:GCM) opened a $40 million offering on a best efforts basis. Each unit includes a warrant that expires in three years.
- Africa Energy (TSXV:AFE) opened a $26.4 million offering on a best efforts basis.
- Barrian Mining (TSXV:BARI) opened a $15 million offering underwritten by a syndicate led by Sprott Capital Partners on a bought deal basis. Each unit includes a warrant that expires in three years. The deal is expected to close on or about May 31st.
- Ceylon Graphite (TSXV:CYL) opened a $3.5 million offering on a best efforts basis. Each unit includes a warrant that expires in two years. The deal is expected to close on or about January 31st.
Major Financing Closings
- Canadian Palladium Resources (CSE:BULL) closed a $4 million offering on a best efforts basis. Each unit included a warrant that expires in a year.
- Euro Sun Mining (TSX:ESM) closed a $3.3 million offering on a best efforts basis.
- Getchell Gold (CSE:GTCH) closed a $1.65 million offering on a best efforts basis. Each unit included a warrant that expires in two years.
- Rock Tech Lithium (TSXV:RCK) closed a $1.62 million offering on a best efforts basis.